Finding a fix for retail’s trillion-dollar problem: Returns

According to a spokesperson for Amazon.com, “once we receive a returned product we conduct a thorough inspection to determine if it can be sold to another customer as either ‘new’ or ‘used.’ If sellable as new, it goes back on the shelf. If we determine it can be sold as used, the team takes the necessary steps to ensure it is a quality product that customers will be happy with once purchased. We work hard to reduce the amount that goes to liquidation.”

Best Buy uses a number of methods to minimize the cost of returns, including selling open box items on its website and hosting a sales event for open box merchandise right after Christmas. The retailer also has a small number of Best Buy Outlets where open box and slightly damaged major appliances are sold.

B-Stock is another channel Best Buy uses to liquidate merchandise.

“Retailers are looking for new ways to make money and find margin,” B-Stock’s Moriarty said. “There are macro trends making returns increase over time, and there are better mouse traps out there today that make it less costly to handle a return.”

B-Stock builds individual online marketplaces for retailers or brands to sell returned, liquidated or excess merchandise in bulk quantities to certified resellers. Moriarty said the volume of inventory sold on its site grew 100 percent from 2017 to 2018. In addition to Best Buy, B-Stock clients include Walmart, Amazon, Macy’s, Lowe’s, GameStop, and J.C. Penney, among others. While B-Stock offers the option for warehouse storage of merchandise at CH Robinson warehouses throughout the country, B-Stock never takes financial ownership nor logistics control of the inventory being resold.

“Typically, our clients get a 30 to 80 percent price increase from how they used to do it,” Moriarty said, even in the online auction website format B-Stock sets up for the retailers. Retailers can restrict where a reseller can sell items. For example, they can require resellers to export the merchandise. Moriarty said much of the inventory is resold on Amazon, eBay or in other small local stores.

Optoro sells software platforms to retailers and brands that identify the best option for maximizing the value or lowering the cost of returned items on a case-by-case basis. Options could include restocking, refurbishing, liquidating, donating or recycling. Its clients include Target, Under Armour, Jet, BJ’s Wholesale Club, Staples, and Groupon. Optoro also has its own liquidation channels, Blinq.com, for liquidation resale to consumers, and Bulq.com, for liquidation resale to resellers.

“We can increase a retailer or brand’s return recovery amount, in many cases, by 25 percent. If it is items that are not going back in stock, we can double or triple the recovery in some cases,” Moore said.

Happy Returns offers technologies and logistics at nearly 300 U.S. locations to allow online purchases to be returned in person when the retailer doesn’t have a physical store. Direct-to-consumer brand start-ups like Everlane, Untuckit and Rothy’s work with Happy Returns, which has put its so-called return bars in malls, on college campuses and even stores like Sur La Table and Paper Source. Happy Returns packages it up for the shopper, sorts the returns by retailer, then ships in bulk to return hubs less expensively than the postal service offers.

“In aggregate, Happy Returns sees a cost savings upwards of 25 percent for our retailers,” said Happy Returns’ Sobie. He attributes this to the combination of hard cost savings of its network compared to shipping and the soft savings of lowering customer service inquires.

While there are technologies to reduce returns like 3D body scanning and other fit innovations, “it’s not working,” Sobie said.

Keeping shoppers happy is harder to quantify, but extremely valuable.

“Returns is a battleground for customers,” Moore said. “It’s a way to win more customers, to get them coming back and to get data so that you know how to better stock items and better make items for your customers as well.”